OPEC’s total oil production jumped by 1.17 million barrels per day in July from June as many Gulf producers restored some output that was shut in for three months due to the closed Strait of Hormuz.
Output at the 11-member OPEC rose to 19.85 million bpd in July, extending the monthly increases for the second consecutive month, according to a Reuters survey based on ship-tracking data and information provided by sources at OPEC, oil companies, and consultants.
In May, when major Gulf producers slashed output, OPEC’s oil production dropped to the lowest level since 2000, and also lower than OPEC production at the height of the Covid lockdowns, when the reduction was prompted by the collapse in demand as a result of the lockdowns. It is worth noting, however, that the May OPEC figure excludes the UAE, which left the group as of May 1.
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The July increase in output was led by Iraq and Kuwait, with Iraq showing the biggest monthly rise in production. Iran also raised output and supply to markets in July, benefiting from two weeks in July in which there was no U.S. blockade to try to curtail Iranian oil exports.
Kuwait is estimated to have produced 1.971 million bpd of crude oil in July. That was up from 1.65 million barrels daily in June, which in turn was up from just 580,000 bpd in May.
Still, volumes were well below OPEC+ quotas as the shipping constraints in the Middle East prevent a full recovery of output.
At OPEC+’s latest meeting earlier this month, the group said it would boost production targets by another 188,000 bpd from September. With this, OPEC+ effectively unwinds the last portion of its production cuts agreed in 2023 to balance the market in a way favorable for member states.
OPEC+ has been unwinding the cuts since spring, but most of that has only been on paper as the Strait of Hormuz blockade has prevented the normal flow of crude oil out of the Gulf producers. Theoretically, OPEC+ should in September produce 1.65 million bpd more than it did in 2023. In practice, this would be challenging because the situation with security in the Persian Gulf is not much better than it was in March, although some tanker traffic is being reported.
By Tsvetana Paraskova for Oilprice.com
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